| November 27, 1996 |
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John H. Huffstutler, Esq. Dear Mr. Huffstutler: This will respond to your letter of November 18, 1996 to Mr. Donald Chapman of the Federal Reserve Bank of San Francisco. In your letter you request the concurrence of the Federal Reserve System in your view that BA Securities, Inc., a subsidiary of BankAmerica Corporation ("BankAmerica") may participate in underwriting certain Quarterly Income Preferred Securities ("QUIPS") to be issued by a group of business trusts established by BankAmerica.1 According to your letter, the assets of the trusts that issue the QUIPS will consist of junior subordinated deferrable interest debentures to be issued by BankAmerica. The QUIPS, as well as the debentures to be held by the trusts, will be rated by a nonaffiliated, nationally recognized rating organization. In addition, BankAmerica will fully, irrevocably and unconditionally guarantee the payment of distributions and payments on liquidation or redemption of the QUIPS, but only, in each case, to the extent of the funds held by the trust that issues the QUIPS. You have stated that the purpose of this guarantee is to qualify the trusts for an exemption from the definition of "investment company" in the Investment Company Act of 1940. In view of the fact that the QUIPS represent an interest only in a direct obligation of BankAmerica, the purpose of which is to provide funding to BankAmerica, Board staff believes that BA Securities, Inc. may underwrite these QUIPS as a permissible servicing activity under section 4(c)(1)(C) of the Bank Holding Company Act (12 U.S.C. � 1843(c)(1)(C)). This determination is limited to the transaction described above. In particular, this determination relates only to securities issued by trusts that are subsidiaries of BankAmerica, and that represent an interest in an obligation issued directly by BankAmerica. Any material change in the facts stated above should be communicated to Board staff.
Sincerely,
(signed) J. Virgil Mattingly
J. Virgil Mattingly
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